Land Acquisition The Must Know The Must Not

Land Acquisition – The Must Know & The Must Not A general overview on the processes, and means of opposing, a land acquisition. By Alliff Benjamin Suhaimi

Land Acquisition – A brief introduction • Article 13 of the Federal Constitution protects one’s right to property. • However, this is not an absolute right. • Section 3 of the Land Acquisition 1960 (“LAA”) allows the State Authority to acquire any private land which is needed for: • Any public purpose; • On behalf of any person or corporation for any purpose if, in the opinion of the State Authority, it is “beneficial to the economic development of Malaysia” • For the purposes of mining, residential, agricultural, commercial, industrial, and/or recreational purposes.

GENERAL PROCESS OF A LAND ACQUISITION

Procedures for Acquisition Notification to the Public Entry and Survey Marking of Land Notation on Land Register Enquiry by Land Administrator/ Summary Enquiry Award by Land Administrator

Notification to Public • The State Authority must publish its decision to acquire (Form A) in the Government Gazette. (Section 4 of the LAA) • The Land Administrator shall give public notice of the notification of the decision to acquire the land, by: • Publishing the notification at either the District Land Office, on public notice boards where the land is situated; or • Publishing the notification near the land specified in that notification. • If the land is acquired for a public purpose, the State Authority shall publish a declaration (Form D) stating as such in the Government Gazette. (Section 8 of the LAA)

Persons interested • The Section 2 of the LAA defines “persons interested” to include every person claiming in interest in compensation to be made on account of the acquisition of land under the LAA. This does not include tenants at will. • Examples of persons interested would include: • Registered proprietors; • Occupiers; and a • Any persons with a registered interest in the land. • Only “persons interested” under the LAA are allowed to raise an objection as to the Land Administrator’s Award, and required to receive notification of any land acquisition.

Entry and Survey • The State Director of Lands and Mines may authorize any of its officer or person to enter the land by way Form B shall also specify the works that those authorised officer can do. (Section 5 of the LAA) • These works include: Surveying the land, marking levels and boundaries, as well as all other acts necessary to ascertain whether the land is adapted for the purposes for which it is to be acquired. • The persons authorised must produce his letter of authority (Form B) and a copy of Form A if requested, before they can enter into the land. • There will be no forced entry on the land. However, persons authorised may enter the land upon giving the occupier three (3) days notice. • Where any persons authorised causes damage to the land, he shall as soon as possible compensate the occupier for all such damage. (Section 6 of the LAA)

Enquiry by Land Administrator • The Land Administrator then holds an Enquiry for the hearing of claims to compensation for all interests in the acquired land. (Section 10 of the LAA) • It is at this stage that persons interested are able to raise any objections and/or issues in relation to the acquisition. • The parties can also have their lawyers present at an Enquiry. • The Land Administrator shall not hold the Enquiry earlier than twenty-one (21) days after the date of publication of the notice.

Enquiry by Land Administrator • Requirements: • Pursuant to Section 10 of the LAA, the Land Administrator shall give public notice (Form E) of the Enquiry by the following means: • Notification in the Gazette; and/or • Copies of said notice being posted at the District Land Office, on public notice boards in the relevant mukim or township; and • In other such places on or near lands specified in the document as the Land Administrator sees fit. • Section 52 of the LAA – relates to manner of public notification.

Enquiry by Land Administrator • The Form E has to be served upon: • • The occupier; The registered proprietor (where he is not the occupier); Any persons having a registered interest in the land; and Any person whom the Land Administrator knows or has reason to believe to be interested therein. (Section 11 of the LAA) • Under Section 53 of the LAA, service can be affected via: • Personal service; • Personal service to any adult member of the interested person’s family residing with him OR • Upon the outer door of the building in which the person ordinarily dwells or carries a business; and • On any public notice board in the town, village or mukim in which the person to be served usually resides.

Enquiry by Land Administrator • Under Section 13 of the LAA, the procedure of an Enquiry is as follows: • On the day of the Enquiry, the Land Administrator makes a full enquiry into the value of all acquired land. • This full enquiry includes inquiries into the respective interests of persons interested, and any objections raised, if any. • Sections 12 and 13 of the LAA; • The Federal Court decision of Semenyih Jaya Sdn Bhd v Pentadbir Tanah Daerah Hulu Langat and anor case [2017] 3 MLJ 561.

Enquiry by Land Administrator • For the purposes of the Enquiry, the Land Administrator has all the powers of a Court – i. e. : • The Land Administrator is able to summon and examine witnesses; • The Land Administrator is able to compel the production and delivery of written statements; and • The administration of oaths and affirmations can be considered by the Land Administrator during the Enquiry. • The Land Administrator is also able to hear the evidence provided by a government valuer and/or the valuer of an objecting party.

Enquiry by Land Administrator • Considerations: • The Land Administrator shall request from the State Director of Town and Country Planning information on the following: • Whether the land is within a local planning authority area; • Whether the scheduled land is subject to any development plan under the law applicable to it relating to town and country planning; and • If there is a developmental plan, the land use stated in said plan. • Section 9 A of the LAA.

Enquiry by Land Administrator • Considerations (ctd): The Land Administrator also has to consider the following matters set out in the 1 st Schedule of LAA: • The market value of the land; • Any increase which shall be deducted from the total compensation, in the value of the other land of the person interested likely to accrue from the use to which the land acquired will be put; • The damage, if any, sustained or likely to be sustained by the persons interested at the time of the Land Administrator’s taking possession of the land by reason of severing such land from his other land;

Enquiry by Land Administrator • The damage, if any, sustained or likely to be sustained by the person interested at the time of taking possession of the land due to acquisition injurious; • If, in consequence of the acquisition, he is or will be compelled to change his residence or place of business, the reasonable expenses incidental to such change; and • where only part of the land is to be acquired, any undertaking by the relevant State/ Govt body for the construction or erection of roads, drains, walls, fences or other facilities benefiting any part of the land left unacquired, provided that the undertaking is clear and enforceable

Enquiry by Land Administrator • The Land Administrator shall not consider the following matters set out in the 1 st Schedule of LAA: • The degree of urgency which has led to the acquisition; • Any disinclination of the person interested to part with the land acquired; • Any damage sustained by the person interested which, if caused by a private person, would not be a good cause of action; • Any depreciation in the value of the land acquired likely to result from the use to which it will be put when acquired; • Any increase to the value of the land acquired likely to accrue from the use to which it will be put when acquired; • Any outlay on additions or improvements to the land acquired, which was incurred after the date of the publication of the declaration, unless such additions or improvements were necessary for the maintenance of any building and unless, in the case of agricultural land, it is any money which has been expended for the continuing cultivation of crops on it.

Award by Land Administrator • At the conclusion of the Enquiry, the Land Administrator shall prepare a written award under his hand, which will be in the form of Form G. (Section 14 of the LAA) • In practice, an oral decision is normally given on the day of the Enquiry itself. This is then followed up with a the issuance of a written award in Form G. • The Land Administrator will make a separate award for each person interested established during the Enquiry. • Every award shall be filed in the office of the Land Administrator and shall be final and conclusive, regardless of whether the persons interested attended the Enquiry. • The service of this award shall be in Form H. (Section 16 of the LAA)

RECENT DEVELOPMENTS & NOTABLE CASES – CONSIDERATIONS AT AN ENQUIRY

Reasonable Expenses • In Exxonmobil Malaysia Sdn Bhd v Pentadbir Tanah Daerah Petaling [2015] MLJU 0314, the Court of Appeal held that the phrase “reasonable expenses”, must be expenses incidental to the change in residence or place of business. • In that case, the issue was whether a loss of income derived from the sale of petrol and diesel from the Appellant’s petrol station was a reasonable expense. • It was held that this loss of income was not incidental to the change in residence or place of business, as hence not claimable under the LAA.

Potential Value of Land • In Bukit Rajah Rubber Co Ltd v Collector of Land Revenue, Klang [1968] 1 MLJ 176 b, the Court held that the property must be valued not only with reference to its condition at the time of acquisition but also its potential development value. • Ordinarily the objective assessment would be the price that an owner willing and not obliged to sell might reasonably expect to obtain from a willing purchaser. • See also the decision of Pentadbir Tanah Daerah Kota Tinggi v Siti Zakiyah bte Sh Abu Bakar & Ors [2006] 2 MLJ 426.

Illegal Conduct not a Basis for Compensation • In the decision of Mohd Shah bin Daud v Pentadbir Tanah Dan Jajahan Kota Bharu [2016] MLJU 240, the Court of Appeal held that illegal and/or unlawful acts cannot be a basis for compensation. • In that case, the Court did not allow the appellant’s other claims for costs of filling and leveling the land because they arose from unlawfulness. The local council had admitted to said acts being unlawful acts of trespass. • In addition, the costs incurred were also incurred by the local authority, and not the appellant himself. Hence, the costs were not claimable.

CONTESTING AN AWARD OF COMPENSATION

Land Reference Proceedings • Section 37 of the LAA allows a person interested to object to an Award of compensation given by the Land Administrator. • Requirements: • Persons interested made a claim to the Land Administrator in due time (Section 38 of the LAA); • If the person interested was present or represented at the Hearing of Award: Six (6) weeks from the date of the Land Administrator’s Award. • In any other case: six (6) weeks from Form H (Notice of Award and Offer of Compensation), or six (6) months from Form G, whichever expires first. • Persons interested have not accepted the Land Administrator’s award; or • Persons interested have accepted payment of the amount under protest as to its sufficiency.

Land Reference Proceedings • Matters that can be challenged during a Land Reference Proceeding: • • Measurement of land Amount of compensation payable Persons to whom compensation is payable Apportionment of compensation • Note: The compensation awarded must be above RM 3, 000. 00 in value. • How to initiate Land Reference Proceedings: • By written application in Form N to the Land Administrator. • The Applicant must state the grounds on which the objection is taken in the Form N. • The Land Administrator shall require a deposit of RM 3, 000. 00 or 10% of the amount claimed from the applicant, whichever is less (Section 39 of the LAA). • In the event the deposit is not paid within thirty (30) days of its being required, the application for reference shall be deemed to have been withdrawn and the Land Administrator’s Award shall thereupon be final.

Land Reference Proceedings • The Land Administrator has six (6) months to refer the matter to the Court by reference once an application is made (Section 38 of the LAA). • If the Land Administrator does not refer the matter: • The person interested may apply directly to Court to obtain directions that the Land Administrator do as such or appear before Court to tender evidence.

Land Reference Proceedings • Process of Land Reference Proceedings: • The Court shall consist of a Judge sitting alone (Section 40 A of the LAA). • Where the objection before the Court is in regard to the amount of compensation, the Court shall appoint two (2) assessors, these being a Govt assessor and a private assessor) to aide the Judge in determining the amount of compensation to be awarded. • Note: While preciously Section 40 D of the LAA mandates that the amount of compensation is to be decided upon by the assessors, the Federal Court has declared that these specific sub-provisions of Section 40 D are unconstitutional. • Therefore, the Judge shall arrive at his own decision (“Land Reference Order”) on the amount of compensation to awarded after having taking into consideration the opinions of the two (2) assessors.

Appealing Land Reference Order • Section 49(1) of the LAA allows for a person interested to appeal a Land Reference Order to the Court of Appeal and Federal Court on the following issues: • The measurement of land acquired; • Persons to whom compensation is payable; and • The apportionment of compensation. • Any Land Reference Order made concerning the quantum of compensation made by the Judge is final and notappellable (Section 49(3) of the LAA).

RECENT DEVELOPMENTS – APPEALING A LAND REFERENCE ORDER

Section 40 D of the LAA : (1) In a case before the Court as to the amount of compensation or as to the amount of any of its items the amount of compensation to be awarded shall be the amount decided upon by the two assessors. (2) Where the assessors have each arrived at a decision which differs from each other then the Judge, having regard to the opinion of each assessor, shall elect to concur with the decision of one of the assessors and the amount of compensation to be awarded shall be the amount decided upon by that assessor. (3) Any decision made under this section is final and there shall be no further appeal to a higher Court on the matter

Unconstitutionality of Section 40 D (1) & (2) • The recent apex court decision of Semenyih Jaya Sdn Bhd v Pentadbir Tanah Daerah Hulu Langat [2017] 3 MLJ 561 has held that Section 40 D(1) and (2) is unconstitutional. • The Federal Court in Semenyih Jaya held that Section 40 D(1) and (2) infringed Article 121 of the Federal Constitution, as it takes away the judicial power vested in a judge in the High Court to make a determination. • In essence, the decision states that the opinion of the assessors should not be binding on the judge in question. • As such, the Federal Court has called for these provisions to be struck down.

Constitutionality of Section 49(3) of the LAA • However, it is noted that the Federal Court has held that Section 49(3) of the LAA is not unconstitutional and within the rights of the Court as per the Courts of Judicature Act 1964 in the following cases: • Semenyih Jaya Sdn Bhd v Pentadbir Tanah Daerah Hulu Langat and anor case [2017] 3 MLJ 561; and • Ng Chin Chai v Pentadbir Tanah Segamat and ors appeals [2016] MLJU 1702. • This effectively means that persons interested are still prevented from appealing any decision as to the value of compensation of land awarded in a Land Reference Proceeding.

CHALLENGING AN ACQUISITION JUDICIAL REVIEW

Challenging a Land Acquisition • Persons interested can also contest the actual acquisition of the land in itself. • This is done by way of a judicial review in the civil courts. • In general, a judicial review application can be initiated if the Land Administrator and/or the State Authority fails to comply with the requirements of the LAA.

Grounds for Challenging an Acquisition • The general grounds for challenging a land acquisition has been enunciated by the Court of Appeal in the decision of Ahmad Saman v Kerajaan Negeri Kedah [2004] 1 CLJ 21, as follows: • When the acquiring authority (Land Administrator or State Authority) has misconstrued its statutory powers; • Where the purpose of the land acquisition does not come within Section 3; • Where it can be shown that the acquiring authority has acted in bad faith; or • Where the acquiring authority has acted contrary to the law.

CASES AND RECENT DEVELOPMENTS

Compliance with Statutory Requirements • The case of United Allied Empire Sdn Bhd v Pengarah Tanah dan Galian Selangor & Ors [2018] 1 MLJ 661 (COA) has held that the compliance of the statutory requirements of the LAA are mandatory in a compulsory acquisition of land. • The State Authority failed to issue a Form A as required under Section 4 of the LAA, thus resulting in no public notice of the acquisition said land. The Land Administrator also failed to endorse the memorial on Form K, pursuant to Sections 23 and 66 of the LAA. • The Court of Appeal held the non-compliance of the statutory provisions of the LAA was fatal to the land acquisition. The land owner was awarded a declaration and certiorari (order) to quash said acquisition.

Compliance with Statutory Requirements • These impact of procedural non-compliance was also discussed in the decision of Ee Chong Pang & Ors v The Land Adminsitrator of The District of Alor Gajah & Anor [2013] 3 CLJ 649 to result in a said acquisition to be unconstitutional. • In this case, the Court of Appeal emphasize that the LAA is a legislation which empowers State Authority to deprive a person of his property. • Therefore, the provisions of the LAA must be given a strict interpretation in favour of the person deprived of his property, in order to give meaning to the constitutional protection under Article 13(1) of the Federal Constitution. • In that case, Form A was never published by the State Authority and hence, the land acquisition exercise not being carried out according to the law was contrary to Article 13(1) of the Federal Constitution

Time Period To Challenge • There has also been a recent clarification on the time requirement to file a Judicial Review under Order 53 Rule 3(6) of the Rules of Court 2012. • Order 53 Rule 3(6) states that a judicial review application is to be filed three (3) months from the date the grounds of the application first arose or when the decision was first communicated to the respondent. • The Federal Court decision of Kijal Resorts Sdn Bhd v Pentadbir Tanah Kemaman & Anor [2016] 1 MLJ 544 has clarified that time to file a judicial review begins when the applicant has actual knowledge of a land acquisition decision that time begins to run – i. e. the delivery of Form E.

Purpose of Acquisition • In the recent decision of Selangor State Government & Anor v Kuala Lumpur Kepong Sdn Bhd [2017] 9 CLJ 31, the purpose of acquisition was for the public purpose of expanding the sanitary landfill. • However, the Appellant had not met and complied with the necessary requirements and qualifications under the Environment Quality Act 1974 for landfill use. • It was held that any compliance with requirements (ie. to actuate the purpose) under other statutes is irrelevant at the Acquisition stage. • Nor is the consideration that the subject land could have been leased instead of compulsorily acquiring it relevant.

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